There are over 30 million small businesses in the U.S, which shows we’re a nation of entrepreneurs.
Payroll is the lifeblood of any business, especially if you’ve hired numerous employees. Perhaps this is the first time you’ve had a team and you’re unsure how to navigate payroll and find a reliable provider.
Sounds like you? Don’t worry, we’ve got you covered. Here are the five key small business payroll tips to know.
1. Evaluate Your Payroll Needs
To do this, you’ll need an Employer Identification Number (EIN) to prove you’re a small business and so you can file your taxes properly. Plus, you’ll need this to apply for licenses and even open a bank account for payroll.
Once done, figure out which pay schedule is best for your company. This determines when you pay your team and how often they get paid, whether it’s weekly, bi-weekly, or monthly.
But make sure you check with your state’s minimum payday laws so you’re compliant.
You must also choose a salaried status, where you either pay your employees hourly or as a lump-sum salary. Outline a payroll budget, as employers must match Medicare and Social Security that is withheld from your team’s pay.
Factor in commissions, time, and whether your employees are offered any other monetary benefits. Work alongside an accountant to figure out how to keep your outgoings low and increase your profit margin.
Further, make sure you classify workers correctly as it could cause major tax issues. If you’re unsure how to categorize your team, then fill in the RS Form SS-8 to determine which category every employee fits in for tax purposes.
Note, there are always hiccups so it’s important to be transparent with your team. For instance, if there’s a delay in payment, then tell your employees that you’re trying hard to rectify this and that their salary will be in their bank accounts ASAP.
Being honest and humble is key to retaining top talent and proving that you care about your team.
2. Set Up a Payroll System
For instance, you can choose a cloud-based system where you input the data and process payroll yourself as it cut costs. Plus, you can allow access to your accountant, managers, and employees so they can check this on their smartphones and laptops.
Or, similar to an online service, you can find the best payroll app for small businesses as these streamline the process. Choose one that integrates with your central accounting system to make payroll management faster and more accurate.
You can also use a payroll card for your business. Not sure how it works? Every payday, you add each employee’s wage to the card so they can use it as a debit card at an ATM or the bank.
3. Use a Timekeeping System
Whichever payroll services for small businesses you choose, get a reputable timekeeping system that integrates with the payroll software.
Many employers manually enter each employee’s shift into a spreadsheet but it takes hours and there’s a greater risk of error.
A timekeeping system lets you calculate your team’s wages (useful if you pay hourly), track everyone’s productivity, and produce an accurate paycheck for each employee. When you browse options, make sure the software has a guard on the clock so you’re notified if an employee not scheduled to work is clocking in or someone is absent.
Further, if your company requires work travel then find a system that tracks gas and mileage. This feature will calculate how much is needed to cover the cost.
You should also choose a system that’s linked with HR, especially if you’re planning to scale your business, as it will organize your employees’ payroll and other sensitive information.
4. Hire a Freelance Payroll Manager
Overwhelmed by small business payroll loans?
Then hire a manager to oversee the system. If an extra full-time employee doesn’t align with your budget, then outsource this role to a freelancer on an hourly basis.
Plus, this means the manager will handle your small business payroll taxes and keep your employee’s information organized.
But, regardless of who you choose, make sure they are trustworthy as they’ll be handling sensitive data like SSNs and bank account information, so make sure you screen the potential employee.
5. Abide By Wage Laws
Your small business must be compliant with federal and state laws. Start by checking that you’re paying the right employment taxes, local or state, and FICA taxes.
Be vigilant and check that every employee is getting paid accurately and on time to avoid any issues.
You should also double-check with the payroll system that the tax deposits adhere to the regular schedule, depending on your tax liability. To make it easier for you, create a separate bank account for payroll as it will also improve transparency.
Then, set up a direct transfer of taxes to a government account to streamline the process. Ask your account to check it’s working properly, otherwise, you could incur penalties.
Small Business Payroll Tips
Hopefully, our small business payroll tips have helped you.
Start by figuring out your payroll needs and whether you want software or a pay card. Choose a system that is integrated with timekeeping to guarantee payments are accurate and well-organized.
Hire a reliable payroll manager to ensure your organization is adhering to wage laws. Good luck!
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